Fitbit's Holiday Outlook Disappoints

Fitbit Inc. said Wednesday that third-quarter profit fell 43% from a year ago as it spent heavily to promote its new fitness trackers, and shares plunged on the company's disappointing outlook for the key holiday quarter.

In the current holiday quarter, Fitbit expects to post 14 cents to 18 cents a share in profit, adjusted to exclude certain items, on $725 million to $750 million in sales. Analysts surveyed by FactSet had forecast per-share earnings of 75 cents on $985 million in revenue.

"We continue to grow and are profitable, however not at the pace previously expected, said James Park, Fitbit co-founder and CEO. The holiday quarter is critical to Fitbit because that is where the company logs about 40% of its annual sales.

Fitbit shares dropped 29% to $9.06 in after-hours trading. Before the results, the stock already had fallen 69% over the past year.

In late August, Fitbit released new versions of its Charge HR and Flex fitness bands. Fitbit's operating expenses have soared this year as the company ramps up marketing of the new products.

For the third quarter ended Oct. 1, the San Francisco-based maker of fitness trackers reported a profit of $26.1 million, or 11 cents a share, compared with a profit of $45.8 million, or 19 cents a share, a year earlier.

Revenue increased to $503.8 million from $409.3 million a year ago.

Analysts had projected a per-share profit of 10 cents a share and revenue of $507 million, according to a survey by FactSet.

Fitbit sold 5.3 million of its fitness-tracking devices in the quarter, more than analysts' forecast of five million, according to FactSet. Fitbit sold 4.8 million units during the same period a year ago.

Excluding stock-based compensation and other items, Fitbit said it would have reported a profit of 19 cents a share, compared with a profit on that basis of 24 cents a share in the year-ago quarter. Analysts had projected a profit of 19 cents a share on that basis.

Write to Georgia Wells at [e-mail]

(END) Dow Jones Newswires

November 02, 2016 16:45 ET (20:45 GMT)

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